Worries over NT dollar's weakness drag down bourse

Share prices closed 0.29 percent lower yesterday after an early rebound on Wall Street's gains gave way to concerns about the local currency's weakness and the local economic outlook, dealers said.

They said sentiment was dampened by a soft New Taiwan dollar against the US dollar which aggravated fears of foreign capital outflows and worries about high oil prices, still within striking distance of US$70 a barrel.

The TAIEX closed down 17.32 points at 6,032.12, on turnover of NT$65.59 billion (US$2.02 billion).

Barits International Securities (倍利證券) assistant vice president Alex Huang said investors have kept a wary eye on economic fundamentals and inflation, given the surging energy prices.

"Besides the possible negative effect [of high oil prices] on major economies, Taiwan's economic data -- such as trade and leading indicators -- have been worrisome," he said.

Given these uncertainties, investors responded negatively to the currency softening, he said.

"Currency weakness may help exporters' gross margin and competitiveness but investors for now are focusing on the possible negative impact on foreign capital flows, rather than taking it positively," Huang said.

The NT dollar closed NT$0.017 lower at NT$32.657 yesterday on the Taipei foreign exchange market, after hitting an intraday low of NT$32.70, its weakest intraday level since Nov. 17.